OTC Markets Group - Q421 was another beat, 2022 is more uncertain

Q421 was another good quarter for OTC Markets Group (OTCM), with revenue up 32% y-o-y to $26.2m and earnings up 58% y-o-y to $9.1m. Revenue was relatively flat on the previous quarters in FY21, but there was an underlying change in the revenue mix as the Corporate Services and Market Data Licensing divisions, which are more resilient in turbulent market conditions, grew to offset OTC Link, which peaked in Q121 in line with the trading volumes on OTCM trading platforms. We expect markets to remain choppy in 2022 due to concerns about inflation and rising interest rates. For FY22, we have cut our EPS estimate by 3% and forecast a 9% decline in revenue and earnings, but expect growth to resume in FY23. We assume OTCM will maintain its FY21 dividend (up 73% from FY20, with a current year yield of 3.4%) due to its strong balance sheet, cash flow generation and track record of a generous dividend payout.